How Fuel Economy Rules Killed the Small Pickup and Supersized the SUV

If you set out to design a federal program that would make Americans drive bigger, heavier vehicles, you could hardly do better than the one Washington actually built. It was sold as a way to save fuel. It was written by people who wanted smaller cars. And its single most visible result was a showroom floor full of enormous trucks, while the small, cheap, sensible pickup went quietly extinct.

I want to walk you through how that happened, because it is one of the clearest examples we have of a law doing the opposite of what its authors intended. And I want to be fair about it. The people who wrote the rules were not trying to build a fleet of three-row SUVs. They were trying to cut oil consumption after a shock. But rules are not judged by intentions. They are judged by what they make people do.

Defining CAFE

CAFE stands for Corporate Average Fuel Economy. The idea is a standard applied not to each vehicle but to the average of everything a manufacturer sells in a model year. A company that sells a big truck can balance it by selling a small economy car, as long as the sales-weighted average meets the target. If it falls short, it pays civil penalties. The standards are set and enforced by the National Highway Traffic Safety Administration, with the Environmental Protection Agency involved on the related emissions side.

The program was born in the aftermath of the 1973 oil embargo. In December 1975 President Ford signed the Energy Policy and Conservation Act, which created the system. Congress set a target of 27.5 miles per gallon for passenger cars by model year 1985, with lower, interim steps along the way. The goal was plain: use less imported oil.

Keep two features in mind, because the whole story turns on them. First, the rules treated passenger cars and light trucks separately, with a different, easier standard for the trucks. Second, the standards were averages, which gave manufacturers a way to meet them by changing the mix of what they sold.

The Split Between Cars and Trucks

Why did Congress give trucks an easier target? The reasoning at the time was reasonable. In the 1970s a pickup was mostly a work vehicle. Farmers, tradesmen and builders needed to haul loads and tow trailers, and a standard that forced the work truck to get the mileage of a compact sedan would have made it less useful or more costly. So light trucks got their own, lower standard, to be set by the regulator.

The category "light truck" was defined in the regulations by features such as cargo-carrying capacity, four-wheel drive and a certain ground clearance. In the 1970s and early 1980s, it covered pickups and vans. Then came a change in what Americans wanted. Families began buying sport utility vehicles and minivans, which were built on truck frames or counted as trucks under the rules. Because those vehicles could be sold under the gentler truck standard, manufacturers had every reason to make more of them. A vehicle that counted as a truck needed fewer miles per gallon than a car of similar weight. That is the origin of the SUV boom, and I do not say it was the only cause, since families liked the space and the high seat. But the rules pushed in the same direction as the market, and pushed hard.

Here is the cruel joke. The law was meant to reduce fuel use, and it created a regulatory advantage for the larger and thirstier vehicles.

The Footprint Rule

For years the car and truck standards were fixed numbers applied across the board. In the mid-2000s the regulators changed the design. For light trucks, beginning with a 2006 NHTSA rule covering model years 2008 through 2011, with the new structure fully in place from model year 2011, the target stopped being a single number and became a formula based on the vehicle's footprint. Footprint is the area between the four wheels: the wheelbase multiplied by the average track width. A bigger footprint means a lower mileage target, and a smaller footprint means a higher one. Later joint rules from the National Highway Traffic Safety Administration and the Environmental Protection Agency extended the footprint approach to cars as well.

The logic was defensible. A regulator did not want a one-size standard that would force the industry to shrink every vehicle, because that would hurt safety and utility, so it scaled the target to the size of the vehicle. A large truck faced an easier goal than a compact car.

Now follow the incentive. If your target depends on your footprint, then making a vehicle bigger makes the target easier. A manufacturer can raise its fleet's average size and pick up regulatory relief in the same stroke. A small increase in wheelbase or track width gives a bigger allowance. Every incentive in the system rewarded growth, and the vehicles grew. A pickup of today is much larger than a pickup of the 1980s, and an SUV is larger than the station wagon it replaced.

This is not a conspiracy. It is arithmetic, and it is the sort of arithmetic that anyone in the industry could see.

The Chicken Tax

Now we come to the second law, the one that kept foreign competition out of the small pickup market.

In the early 1960s, the United States and Europe were in a dispute over trade in poultry. European countries had imposed tariffs that cut into American chicken exports, and in January 1964 President Johnson answered with a 25 percent tariff on a handful of imported goods, which included light trucks. The chicken has long since stopped mattering. The tax on light trucks stayed on the books, and it is still there today. It is known, famously, as the chicken tax.

The effect was to shield American truck makers from foreign competition. Japanese manufacturers, which were then selling small, cheap pickups around the world, found it difficult to bring them into the United States at a competitive price. Their answers were ingenious. Some built their own plants in America, which is how several of the foreign brands came to build trucks here. Some imported the trucks in pieces, or as cab-and-chassis units without the bed, to fall under a different tariff category. Some imported vans as passenger vehicles with seats and windows and then took the seats out after they arrived. A well-known case involved a cargo van that was imported with rear seats and windows so it could enter as a passenger vehicle, and whose interior was then changed for cargo use. I mention it because it shows how much trouble a tax can cause when companies spend effort on tariff classification rather than on making better vehicles.

I should be careful about causes here. The chicken tax did not make the American small pickup disappear all by itself. But combine it with the fuel economy rules and a picture forms. Small imported trucks were costly to bring in, and small domestic trucks faced a regulatory framework in which the profit was in the bigger models.

What Happened to the Small Pickup

Think of the small pickup as it was in the 1980s and 1990s: the compact Chevy S-10, the Ford Ranger, the Dodge Dakota, the Toyota and Nissan compact trucks. They were cheap, handy and efficient, and young families and tradesmen bought them in large numbers. Then, one by one, they fell away. The S-10 ended in the early 2000s. The Dakota and the Ford Ranger both left the American market around 2011. The market for a truly small, inexpensive pickup nearly vanished. In its place were full-size trucks that grew larger and more expensive with each redesign, and mid-size trucks that were bigger than the compacts they replaced.

Why? The reasons are layered, and honest analysis admits it. Consumers wanted more power and comfort, trucks became family vehicles and manufacturers found that large trucks carried the fattest profit margins. Safety and emissions rules added cost, and a small truck's price advantage got thin. But the regulatory structure tilted the playing field. A manufacturer asked how to make money under fuel economy standards got the answer: build vehicles whose targets are easiest, and make them larger.

When a compact pickup finally returned, with Ford's Maverick appearing in the early 2020s as a small, relatively affordable truck that sold briskly, it proved that demand for the small pickup had been there all along. That return deserves a note: it shows a market can supply what customers want when something does not stand in the way.

The Argument in Numbered Form

1. CAFE set separate standards for cars and light trucks, with easier targets for the trucks, beginning with the Energy Policy and Conservation Act of 1975.
2. Manufacturers responded to the incentive. Vehicles that could qualify as light trucks, including SUVs and minivans, got a regulatory advantage, and the SUV boom followed.
3. Footprint-based targets from the 2000s made the target easier as the vehicle grew, so size itself became a way to comply.
4. The 1964 chicken tax kept cheap imported pickups out, shielding the domestic market from the competition that might have kept small trucks alive.
5. The result was fewer small, cheap, efficient trucks and more large ones, the opposite of the law's stated purpose.

The Safety Question

There is a hard question here that deserves honesty. A standard that pushes manufacturers toward lighter vehicles may reduce safety, because in a crash, size and weight matter. A National Research Council committee reviewed the fuel economy program in 2002, and all but two of its members concluded that the downsizing of the late 1970s and early 1980s, partly due to CAFE, probably caused 1,300 to 2,600 additional traffic deaths in 1993. Two members dissented, and that conclusion has been contested, and the debate over how much weight matters, compared to design, continues. I raise it because it is part of the tradeoff, and because it shows the difficulty in the regulator's position. Make cars lighter and you may lose lives. Let them get heavier and you lose fuel economy. There is no perfect answer, and that is exactly why the decision should not be left to a formula that nobody voted on.

The Strongest Objection

Defenders of the standards have a strong reply. Fuel economy has improved substantially since 1975, and that saves families money at the pump and reduces oil consumption. The footprint approach was adopted precisely to stop the industry from meeting targets by shrinking vehicles and to protect safety. The rules did not create the demand for SUVs, since consumers wanted them. And a fleet of larger vehicles is still more efficient than it would have been without the standards.

Let me concede the true parts. Engines and transmissions are far more efficient than they were, and some of that was driven by the rules. Consumers did want bigger vehicles, and they still do. Footprint standards did address a real problem.

Now the answers, in order. First, saying that the standards improved efficiency is not the same as saying they were the best way to do it. A fuel tax would have given every driver, in every vehicle, an incentive to save fuel at the margin, without regulators deciding which vehicles qualify for gentler targets. Second, the distortions were predictable, and economists predicted them. Any rule that makes the target depend on a feature of the product gives the producer a reason to alter that feature. Third, a standard that makes cars more efficient but also makes them more attractive to drive further, which economists call the rebound effect, claws back part of the benefit. Fourth, the rules raised the price of new vehicles, and the burden of that falls on people buying their first car or replacing an old one.

None of this proves the standards were useless. It proves that they were a blunt instrument that had effects no one intended, and that the people who bore the costs had no say in the design.

The Constitutional Question

This is also a matter of who decides. Article I, Section 1 says "All legislative Powers herein granted shall be vested in a Congress of the United States." The 1975 statute set a number for cars and delegated nearly everything else to an agency. Since then the real decisions, how to define a light truck, whether to use a footprint, what the target should be, how fast to ramp it up, have been made by regulators, then revised by the next administration, and revised again. A manufacturer that has to plan a vehicle seven years ahead is planning against targets that may shift with the next election. That is not stable law. It is guesswork with penalties.

If Congress wants to set the fuel economy of the national fleet, it ought to say so in the text of a statute and answer to voters for the result. For how a similar pattern shows up in household appliances, see Low-Flow Toilets and Banned Bulbs, How Washington Moved Into Your House. For how the mandate approach is now extended to the vehicle itself, see The Electric Car Mandate Is a Choice Washington Makes for Your Driveway. And for the larger question of what the government does and does not control in your fuel costs, read Four Pieces of Every Gallon and Why the President Controls the Fewest.

What Better Policy Would Look Like

• Pass the law in Congress. If a standard is worth having, it is worth a recorded vote.
• Close the loopholes that reward size. If you must regulate, do not let a vehicle comply by growing.
• Consider a price signal. A fuel tax, or simply a lower reliance on mandates, would let each driver decide how to economise.
• Repeal the chicken tax. A tariff imposed over a poultry dispute in 1964 has no business shaping the pickup market sixty years later.
• Let buyers choose. If families want a small, cheap, efficient truck, nothing should stand in the way of someone making it.

The Case in Brief

1. The Energy Policy and Conservation Act of 1975 created CAFE and gave light trucks a gentler standard than cars, which gave manufacturers a reason to build vehicles that qualified as trucks.
2. Footprint-based standards from the late 2000s made targets easier as vehicles grew, so increasing size became a path to compliance.
3. The 1964 chicken tax, a 25 percent tariff on imported light trucks, shielded domestic makers from cheap foreign pickups.
4. Together these rules helped push the market toward larger trucks and SUVs, and the small, inexpensive pickup nearly disappeared until the market brought it back.
5. Decisions this large belong to Congress, in plain statutory text, not to a shifting formula that nobody voted on.

What you can do: Look up how many miles per gallon the vehicle you drive is rated for, then write to your representative asking whether fuel economy standards should be set by a vote in Congress.